Capital gains accrual depends on a present right to receive consideration; postponed entitlement to goodwill proceeds is not taxable.

Capital gains tax under section 12B of the Indian Income-tax Act, 1922 arises only when the capital gain has actually accrued in the relevant accounting year, which requires a present enforceable right to receive the consideration. Where the transfer of goodwill gave the assessee only a postponed entitlement payable on retirement or death, and no right to receive any part of the amount during the accounting year, no capital gain accrued in that year. The levy therefore did not arise, and the issue was resolved in favour of the assessee.

---

---

Issues: Whether capital gains tax was attracted on the transfer of goodwill where the assessee had no right to receive the consideration during the relevant accounting year.

Analysis: Capital gains liability under section 12B of the Indian Income-tax Act, 1922 arises only when capital gains have actually accrued in the relevant accounting year. On the terms of the indenture, the assessee's entitlement to Rs. 1,50,000 was postponed until retirement or death, and during the accounting year he had no present right to receive any part of that amount. Since the assessee had no enforceable right to the sum in that year, no capital gain accrued then.

Conclusion: The question of levying capital gains tax did not arise, and the decision was in favour of the assessee.

Ratio Decidendi: Capital gains tax is attracted only when capital gains accrue in the relevant accounting year, meaning the assessee has a present right to receive the consideration; a postponed entitlement does not constitute accrued capital gain.

---